Final answer:
An increase in steel prices leads to a higher cost of car production and a decrease in quantity supplied, represented by a leftward shift in the supply curve, while a decrease in prices would result in a rightward shift and increased supply at the same price.
Step-by-step explanation:
The question related to the effects of rising steel prices on car manufacturing falls under the Business category at the college level. The scenario illustrates how an increase in the price of steel leads to an increase in the cost of producing cars, which in turn causes car manufacturers to supply a lower quantity of cars at any given price. This relationship between cost and supply quantity can be depicted using a supply curve on a graph, which shifts leftward to indicate a reduction in supply.
For example, with steel prices rising, at a fixed price of $20,000 per car, the quantity supplied decreases from 18 million cars to 16.5 million cars, showed by the movement from the original supply curve (So) to a new supply curve (S₁) marked as point L. Conversely, if steel prices were to decrease, making car production less expensive, we would observe a rightward shift in the supply curve, from So to S₂, where at the same price of $20,000, the quantity supplied would increase, as shown by the increase to 19.8 million cars, indicated by point M on the supply curve S₂.